Correlation Between VersaBank and Trustmark
Can any of the company-specific risk be diversified away by investing in both VersaBank and Trustmark at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining VersaBank and Trustmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Trustmark, you can compare the effects of market volatilities on VersaBank and Trustmark and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in VersaBank with a short position of Trustmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Trustmark.
Diversification Opportunities for VersaBank and Trustmark
Almost no diversification
The 3 months correlation between VersaBank and Trustmark is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Trustmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trustmark and VersaBank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on VersaBank are associated (or correlated) with Trustmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trustmark has no effect on the direction of VersaBank i.e., VersaBank and Trustmark go up and down completely randomly.
Pair Corralation between VersaBank and Trustmark
Given the investment horizon of 90 days VersaBank is expected to generate 0.93 times more return on investment than Trustmark. However, VersaBank is 1.08 times less risky than Trustmark. It trades about 0.23 of its potential returns per unit of risk. Trustmark is currently generating about 0.13 per unit of risk. If you would invest 1,338 in VersaBank on September 2, 2024 and sell it today you would earn a total of 461.00 from holding VersaBank or generate 34.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Trustmark
Performance |
| Timeline |
| VersaBank |
| Trustmark |
VersaBank and Trustmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Trustmark
The main advantage of trading using opposite VersaBank and Trustmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Trustmark can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Trustmark will offset losses from the drop in Trustmark's long position.| VersaBank vs. Mountain Commerce Bancorp | VersaBank vs. American Riviera Bank | VersaBank vs. Home Federal Bancorp | VersaBank vs. Prime Meridian Holding |
| Trustmark vs. Home Bancorp | Trustmark vs. First Business Financial | Trustmark vs. LINKBANCORP | Trustmark vs. Great Southern Bancorp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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